Australian Dollar steadies after hawkish RBA Minutes as soft US Dollar lends support

• RBA July Minutes confirm hawkish hold with several board members open to further rate hike.
• A soft US Dollar, pressured by Treasury buyback plans and fresh Iran sanctions, is helping the Aussie hold its ground.
• Traders now look to Australia's July inflation print on Wednesday and Fed Chair Warsh at Jackson Hole on Friday.

AUD/USD steadies around the mid 0.7100s at the time of writing on Tuesday, clawing back most of the previous day's modest losses. The recovery came after the Reserve Bank of Australia (RBA) released the Minutes of its July meeting, which read as a hawkish hold, and as a soft US Dollar (USD) kept a floor under the pair.

The Minutes showed several board members think another rate hike may still be needed with inflation risks tilted to the upside. Members flagged rising Oil prices, broad cost pass-throughs and the data center boom as sources of concern, though others pointed to offsetting downside risks.

The futures market now prices in a slightly higher than 60% chance of a further move before year-end, up slightly from last week. The next test comes on Wednesday with Australia's July Consumer Price Index (CPI).

The US Treasury's decision to at least double its buyback operations for longer-dated bonds has weighed on the Greenback with reports that Secretary Scott Bessent could tap up to $1 trillion from the Treasury General Account to fund the repurchases. Escalating Iran sanctions have added to the unease.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.7160, keeping a modest bullish bias as it holds above both the 20-period Simple Moving Average (SMA) at 0.7149 and the 100-period SMA at 0.7081. The pair is consolidating just under the nearby horizontal resistance at 0.7167, while the Relative Strength Index (RSI) near 61 suggests positive, but not extreme, momentum that could sustain further upside as long as price stays supported by the short-term averages.

On the topside, immediate resistance is aligned at 0.7167, and a clear break above this barrier would open the way for a continuation of the recent recovery. On the downside, initial support is seen at the clustered horizontal levels around 0.7154, 0.7143, and 0.7138, with the 20-period SMA reinforcing this zone near 0.7149. A deeper pullback would bring the longer-term 100-period SMA support near 0.7081 into focus.

(The technical analysis of this story was written with the help of an AI tool. Know more.)